Doug Casey of Casey Research recently conducted an interview where he spoke about Bitcoins to Louis James, Editor of the International Speculator. In the interview, Casey makes a few claims that had me yelling at my computer screen. It is important to remember that Casey has a vested interest in promoting a gold standard. His company, Casey Research, specializes in precious metals. So his analysis of any currency system that is not predicated on metals is obviously going to be somewhat biased.
This particular claim by Casey rubbed me the wrong way:
L: Do they have value in themselves?
Doug: There’s the rub; I don’t see that they do. Bitcoins are just an electronic abstraction. They can’t be used for anything else, nor are they made of something that can be used for anything else. They are like one of those knots in a string that disappear if you pull hard enough on the ends of the string. They are not backed by anything at all. Like government fiat currencies, they are a con game, functioning only as long as people have confidence in them, regardless of whether that confidence is well placed or not.
So Doug, what you are saying is that if gold could not be turned into jewelry, it would not be a money? What industrial uses does gold have outside of being ornamental? Sure it has some minor industrial uses such as plating for electronics or a few other obscure things such as radiation shielding on astronaut helmets, but other than that, the vast majority of gold that is actually used in some physical way is nothing more than pretty trinkets. The trinkets themselves are totally useless as far as improving the conditions of humanity are concerned.
Of course, the answer to my question “what uses does gold have besides being ornamental?” is obvious to Doug, and everyone else, its primary use is to act as a store of wealth and as a trade facilitator. The market has a need for a trade facilitator which allows the division of labor to take place. The market has a need for a medium to store wealth. These market driven needs impart value to gold faaaaaar above what it would normally be valued at for industrial or ornamental uses alone.by